Lavendon Share Discussion Threads

[gleach23] 27/11/2016 17:46

Midas comment today. I had wondered about Ashtead -

Equipment hire specialist Lavendon, which helped to install the Christmas lights in London’s Regent Street, has had an exciting week.On November 21, the company’s share price closed at 139p. The following day, the stock soared to 197p. The reason was a 205p-a-share cash bid from Belgian equipment and parts group TVH.

Though the bid looks generous at first sight, it has not been recommended by the board, primarily because certain large shareholders think the price is too low.
These include investment manager M&G, which holds almost 19 per cent of the stock.
TVH does have support from two large investors, which own just over 12 per cent of the shares between them, and it bought a further 5 per cent in the market last week. But that still leaves an awful lot of shareholders to be persuaded.
Midas recommended the stock in April, when the price was 134p. The shares jogged along until last Monday’s offer, but they now sit at 204¼p.

TVH has said its offer is final unless a rival bid comes along and there is, of course, a chance that a third party will enter the fray with a higher offer for Lavendon, sparking a bidding war. Some investors may feel like waiting to see what happens and some may feel inclined to follow M&G’s lead and put their faith in Lavendon’s long-term future as an independent company.

The issue is further complicated because TVH has said that right now it will only proceed with the deal if investors with 75 per cent of the shares vote in favour, but it reserves the right to reduce this to 50 per cent plus one share at a later stage.

Most observers believe the chances of a rescue bid emerging are relatively slim. The most obvious candidate is UK equipment hire group Ashtead, which launched a joint bid for Lavendon with TVH back in 2011. Since then, Ashtead has become increasingly focused on its American division, so there seems little reason for it to bulk out its UK business now.

Private equity firms have also been touted as potential white knights, but they are famously reluctant to enter into bidding wars. The share price – hovering just below the offer price – is extremely telling, suggesting that the stock market does not expect a rival bidder. That leaves TVH as possibly the only game in town.

Given M&G’s stated antipathy towards the offer, it would be difficult for the Belgians to reach the 75 per cent acceptance level. But, if they want Lavendon badly enough and they hear supportive noises from other big investors, they may go down to the 50 per cent acceptance mark. In that case, their chances of success are significantly bolstered. There is also the possibility that they will walk away entirely. In that case, the shares would almost certainly fall. However, Lavendon’s performance has been improving and analysts believe the stock should comfortably exceed 200p over the next 12 months if the group remains independent.

Midas verdict: Investors who bought in April have already benefited handsomely from the bid, so all but the most intrepid should sell out and bank the profit. But the saga is still at an early stage, so adventurous investors may prefer to hold out for a little longer.

[qs99] 25/11/2016 13:11

indeed. Fact that MMs are mopping up shares above bid price suggests more to come IMO...

[exbroker] 25/11/2016 12:52

Or it could be TVH as Bof A are the broker to them, but if so why not 205 and why not say its for them??

[qs99] 25/11/2016 12:43

yup, fair point. Although why do that when TVH have said final offer unless another bidder only rather than being blocked by other shareholders....not being naive, just wondered if that is what they have publicly have said, will they be held to that by TP?

[exbroker] 25/11/2016 12:39

Hi QS99
It could be an arb trying to force a slightly higher price by buying enough to be taken seriously.

[qs99] 25/11/2016 12:09

wow, thanks exbroker, that is interesting indeed....bid now above takeover price, so presume market expects a counter bid no? DYOR any thoughts?

[exbroker] 25/11/2016 12:06

I am told that Bank America has been round bidding 202 for size, told they have bought 7m odd so far.

[qs99] 25/11/2016 12:01

10.02 RNS from LVD above, talks of TVH dealings in shares DYOR

[sell it high] 25/11/2016 11:41

Do you have a link to the TVH update please?

[qs99] 25/11/2016 11:34

something appears "up" IMO...probably wrong, but looks odd to be 1p away from offer price?

[sell it high] 25/11/2016 11:32

Looking good. Still holding...

[qs99] 25/11/2016 11:30

aye aye, is a counter bid coming in? nearing £2.04 to buy now>? DYOR

[qs99] 25/11/2016 11:07

interesting update from TVH via RNS....thoughts>?

[exbroker] 25/11/2016 09:32

The arbs seem to be all over this, from the rule 8.3`s it looks like they already have 5% and there may be others who have not yet crossed the 1% level. It will get interesting if TVH start to buy in the market. I bought in for the arb at about 192 as I expect this deal to go through.

[mikepompeyfan] 24/11/2016 14:15

Can't believe what the trades data tells you. It's showing my sell as an OK trade buy.

[dr_smith] 24/11/2016 13:49

Thank-you again Jeffian and Abcurtis.

[mfhmfh] 24/11/2016 13:46

I've sold as well. Just didn't have the nerves to hold on. Best of luck to everyone holding, I'm sure you will all do very well.

[haywards26] 24/11/2016 13:33

I sold too. I have crystallized my 52% gain and will await further developments. If the deal does not go through I will most likely buy back.

[mikepompeyfan] 24/11/2016 13:11

I've sold. Happy to take a profit plus the last few year's dividends having bought in the 170s.

[abcurtis] 24/11/2016 13:07

TVH teamed up with Ashtead in Jan 2011 to bid for LVD. Google it. Now they are back. The 8.5's show BoA stake increasing, that's TVH's broker and today Franklin Resources show 2.94% stake going to 0%.

[jeffian] 24/11/2016 12:37

Not "thrown out" but not recommended by the Board. That was on the basis that there was not enough institutional support, thus the corollary of that is that if enough institutions change their minds, it's still on.

Re F1 - Exactly!

[dr_smith] 24/11/2016 12:15

Thank-you Jeffian.
Yes, I am nervous as my understanding of risks seems out of synch with share price
All you say makes, sense. thank-you for laying it out.

Re:
"the existing deal is there to be done at 205p."

The rns says it was thrown out:

"Having consulted with certain of the shareholders approached by TVH, it was apparent that the level of support anticipated was not forthcoming. Consequently, the Board unanimously concluded that it was unable to proceed with a recommended offer, regardless of the proposed offer structure, due to concerns over the significant execution risk and the potential disruption to Lavendon's business. The Board subsequently encouraged TVH to approach additional shareholders to establish whether TVH could secure further support but they declined to do so. "

We concur there seems little upside from 195, hence my question, the risk/reward market driver seems out of synch the share price

So Hamilton needs to ask Verstappen to accidentally take out Rosberg! ;-)

[dr_smith] 24/11/2016 11:54

Thank-you Adam.I came across similar item some time back, but there always tends to be exceptions / workarounds, so struggling to understand current market position as risk and share price seem disjointed on available info.

(Middle name Russell - I am no Doc ;-)
Ironically I use my name not to hide behide a handle - and end up misleading.

Dave.

[jeffian] 24/11/2016 11:50

You seem rather a nervous holder, Dr_Smith. If you don't see this as a long-term hold or income play, you need to take the money and run, don't you?

The permutations are -
* the existing deal is there to be done at 205p. They have already done due diligence and the proposal to proceed via Scheme of Arrangement makes for a straightforward transaction, so low risk of execution.
* the fact that the share price is hovering close to, but below, the bid price suggests the market thinks it is still "on" but that a higher competing offer is unlikely.
* It also means that there remains the possibility that those institutions who have not been tempted by a bid at 205p may accept an improved offer, but the market is not expecting any improvement by the existing bidder to be more than marginal.

Thus, for anyone looking at this purely short-term, there appears to be little upside on the current share price and a likely pull-back if the bid fails. The unknown remains the possibility of a counter-bid, but the market is not expecting one. Long-termers may view the current situation as confirmation of their belief that LVD was undervalued (and maybe still is at the bid price) and be happy to hold on, receiving the dividend while management continue to grow value, although I suppose another long-term strategy might be to sell now, which gives close to the bid price anyway, and buy back in if the bid fails!

The Hamilton/Rosberg thing is easier. Rosberg has to suffer engine failure or crash. Come on, Verstappen!

[adamb1978] 24/11/2016 11:31

Dr Smith - there is a rule in the takeover code which says that if an offeror makes a statement saying that their offer is final and/or won't be increased, then their hands are tied unless a competiting offeror emerges.